Strategy

Subject to change at any moment

Update (18-Dec-03) on selling

A bit about my (still) evolving strategy:

• I buy stocks in the $5-$8 range and in lots of 1000 shares. That means I risk at most $8000 on any one stock, and if the price goes up a dollar, I've made $1000. That's 20% on a $5 stock or 12.5% on an $8 stock,which still ain't too shabby.

• I will accept a maximum loss of 8% on a stock. The 8% limit moves up (but not down) with the price of the stock. This helps to cut losses if I must and avoids riding a stock back down after a rise. This principle is sometimes really hard to follow: "But it might go back up...!"

• I identify potential buys using free stock scans from StockCharts.com. At the moment, I mostly use the screen Stocks in a New Uptrend (ADX). I check stocks turned up by the screen against the Second Opinion service from Market Edge (which I get free with my brokerage account), and I study the charts. For the strongest looking candidates, I look at a profile of the company and the recent earnings report (for example, on CBS Marketwatch).

• I avoid buying stocks just before they report earnings. The expectations game makes this a total crap shoot. The most accurate earnings calendar I've found is the one on CBS Marketwatch.